Retail Excellence: Newegg.com: The Power of Marketing

NewEgg.com grabbed the industry’s attention last year by launching its national “Take it From a Geek” multimedia advertising campaigns, and ultimately compelling Best Buy to issue a cease-and-desist order for a television commercial that parodied its Geek Squad.

But the campaign had the opposite effect on consumers who flocked to Newegg.com where they increased the company’s registered user base by 20 percent, from 16 million to about 20 million; contributed to 2.5 million product reviews; and helped the company maintain its status as one of the top online destinations for IT, gaming and consumer electronic products.

The e-tailer is now tracking double-digit growth from $2.5 billion in 2011, which was up about 8.7 percent from 2010, according to Bob Bellack, the company’s former CFO. Bellack was was named North American CEO in February.

“The marketing and branding was a big benefit,” Bellack said. “More people now know what NewEgg is: We have one of the broadest selections in the IT space, great delivery times and great service. The promotion was very helpful in building more relations.”

That type of success generates more resources for the company, which translates to higher goals and a lot more work for everyone. During the last year, NewEgg rebuilt its management team, adding a new CFO and a head of logistics who, along with Bellack, are focused on increasing efficiencies and developing other improvements in every step of the supply chain.

Those efforts also include working closer with vendors for more customer incentives and promotional support, as well as improving all logistics and cracking down on fraud. The company also hired a new head of product and technology who’s in charge of product selection and fulfillment in each customer segment.

“It’s a never-ending process to get better and better,” Bellack said. “We’re making headway, but it’s going to be a ‘forever’ kind of thing.”

Newegg is also continuing a strong focus on customer acquisition and improving customer service in each of its silos. The company divides its core audience into four segments: small- and medium-size businesses, gamers, DIY’ers and deal-oriented consumers. The goal now is to learn more about each customer, hone the different marketing strategies to each segment and attract the right customers.

“What we’ve done in the last six to 12 months is to focus on aligning every part of the business around those segments,” Bellack said, adding that NewEgg will rely heavily on social media strategies to service and acquire customers.

“The challenge is that we’re well-known among the core IT folks, but not so well-known outside that group,” he said. “As we go forward, we must refine our message and make sure it resonates with existing customers, and be very selective how we invest in reaching new customers.”

Another big effort for NewEgg involves growing its SMB segment, which makes up about 30 percent of its business, and increasing the services it provides those customers. An expanded SMB team is continuing to refine the B2B portion of NewEgg.com by adding more training and educational videos, improving billing and credit functionality, and adding more enterprise and commercial SKUs.

“Our orientation needs to change to help our vendor partners grow their share of the pie each year,” Bellack said. “We need the tools and capabilities to help them sell more stuff. B2B is a natural extension of that relationship.”

On the consumer front, NewEgg will continue to increase online personalization and dynamic customer targeting, all of which are designed to deliver more relevant recommendations and search results to each segment. So far, the efforts have yielded higher conversion rates.

But since this is the world of e-commerce, there’s always more to do.

“I was hoping this was going to be a place where I could kick back and relax, but it hasn’t been very peaceful,” Bellack said, with a laugh. “Five years ago, most of brick and mortars didn’t have a great online presence, but now they’ve figured out how to do it, and they’re all trying to be more aggressive. So there really is no place to relax in the e-commerce space.”